Mayor Zohran Mamdani’s administration is mired in yet another supermarket mess.
An online grocery platform that runs a city program for low-income households has stiffed Big Apple grocers to the tune of more than $1 million — even as the city seeks to enlarge the company’s contract to a whopping $75 million, The Post has learned.
San Diego-based Mercato — whose web portal lets eligible New Yorkers purchase fresh fruits and vegetables at a 50% discount from local grocery stores throughout the five boroughs — received $30.4 million over the past four and a half years from the city’s “Groceries to Go” program, city records show.
Nevertheless, Mercato this year has failed to pay for more than $1 million in produce it delivered to customers months ago from dozens of independent supermarkets, including C-Town, Bravo and Key Food, according to store owners.
“I had to hunt them down and basically beg them for $10,000 — and they still owe me $4,500,” said Anthony Diaz, who manages a C-Town in Williamsburg, Brooklyn.
In Queens and the Bronx, Mercato owes Jorge Guillen’s two Cherry Valley Marketplace stores a combined $36,000, according to the grocer.
“The impact on our business is huge,” Guillen told The Post. “It affects my ability to purchase goods and pay my bills, so we had to find new financing. We took on debt.”
Despite the mess, the city’s Department of Health and Mental Hygiene recently awarded Mercato a $75 million, six-year contract that was slated to begin in July, according to public filings.
The health agency told The Post that it is “unaware of delays in payments to supermarkets,” according to a spokesperson.
Approval of Mercato’s new contract is being held up by the city Comptroller’s Office, which has “outstanding questions” for the DOHMH, according to a spokesperson for Comptroller Mark Levine.
Reached by The Post, the his spokesperson declined to elaborate on the agency’s questions.
Last year’s $30.4 million contract with Mercato, which has been a city vendor since 2023, expired on June 30. According to the city’s website, the Groceries to Go program “has been paused and is not enrolling new participants at this time.”
Guillen says he had a Zoom call about a month ago with Mercato’s chief executive Bobby Brannigan. Guillen said Brannigan told him Mercato was running behind on payments because the city had been delaying its reimbursements to Mercato.
“Usually Mercato deposits the funds in 48 to 72 hours,” Guillen told The Post. “Now Mercato has not paid some NSA members since February.”
A spokesperson for the health department, however, said that based on a review of fiscal 2026 data, all invoices from Mercato have been paid on time.
“We don’t know why our members are not being paid,” said Anthony Peña, president of the National Supermarket Association, which represents about 450 independent grocers in New York City.
“But at the end of the day the city is not properly vetting a company that it is funding,” Peña added. “It begs the question of what will happen with these public grocery stores.”
Peña referred to Mamdani’s controversial, $70 million plan to open a government-run supermarket in each borough of the city — a proposal that the NSA and other local grocer groups say will pose unfair competition for their already struggling businesses.
Mercato — which also has operated in major cities including San Francisco, Chicago, Denver, Philadelphia, Austin, Texas, and Washington, DC — did not return multiple phone calls and emails seeking comment.
Peña estimates dozens of NSA’s members are collectively owed more than $1 million from Mercato, with many having waited months. Until this year, Mercato had been making regular payments to the grocers, including within days of deliveries up to a couple of weeks, he said.
Local grocers said the 10-year-old company, which moved its headquarters from New York to San Diego in 2019, was a lifeline to some stores during the pandemic. Mercato signed up independent grocers that had not previously offered online shopping.
“I was grateful to them in the beginning,” said Diaz of Williamsburg, “They helped me to survive when there were very few services for the independents.”
Brannigan, a Brooklyn native, told the San Diego Tribune in 2019 that in college he launched an online business selling textbooks in 2001 — ValloreBooks — that grew to $100 million in sales. He sold the company in 2012 and invested in Uber and Twilio among other startups at the time, according to the report.
Aris Duran, who owns several Key Food locations in the city, was owed $45,000 at his College Point store in February. Mercato made small payments to chip away at the debt, but Duran got fed up and threatened to sue the company two weeks ago.
Suddenly he was paid in full with a check for $23,000, he told The Post. But he’s vowed not to work with the company again, particularly since it charged him a $99 monthly service fee even when it wasn’t paying for the groceries it had delivered to his customers.
A spokesperson for the city’s Department of Health said it is still assessing how to relaunch the subsidized program, which has been suspended since July 1.
“Groceries to Go provides eligible New Yorkers with critical access to affordable groceries online and for pickup or delivery. As prices of groceries increase, the importance of programs like this one have grown in need too. While the program has been temporarily paused, we are exploring our options so that these resources continue to reach New Yorkers in need.”
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